Nvidia Beat Q3 Estimates But Still Falls, Momentum Is Dying

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Nvidia Corporation's Q3 2025 results beat estimates with 94% YoY revenue growth and 103% EPS growth, but the stock fell 1.21% in after-hours trading, suggesting that investors already priced in a beat...

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GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4739318-nvidia-beat-q3-estimates-but-still-falls-momentum-is-dying><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Nvidia Corporation's Q3 2025 results beat estimates with 94% YoY revenue growth and 103% EPS growth, but the stock fell 1.21% in after-hours trading, suggesting that investors already priced in a beat...</p>\n\n<a href=\"https://seekingalpha.com/article/4739318-nvidia-beat-q3-estimates-but-still-falls-momentum-is-dying\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"LU1267930730.SGD","symbol_name":"富兰克林美国机遇基金AS Acc SGD 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results beat estimates with 94% YoY revenue growth and 103% EPS growth, but the stock fell 1.21% in after-hours trading, suggesting that investors already priced in a beat.Despite strong performance, Nvidia's current valuation prices in significant future growth, making the stock less attractive for long-term investors at current levels.Hyperscaler demand remains robust, with major partners like Oracle, Microsoft, and AWS driving Data Center revenue, despite concerns over overheating GPUs.Given Nvidia's volatile history and high valuation, I recommend waiting for a dip before taking a notable-sized position. I rate NVDA stock as a Hold.   BING-JHEN HONG  Nvidia Corporation (NASDAQ:NVDA) just reported its Fiscal Q3 2025 results, which easily beat estimates. Nonetheless, the stock fell by 1.21% in after-hours trading, suggesting that the market priced in better-than-expected earnings. I like Nvidia, as it's undoubtedly one of the strongest companies in the world, and it proved some doubters wrong with its recent results. However, the valuation still prices in a lot of growth at the current price. My analysis tells me that Nvidia will need to grow its FCF/share (when removing stock-based compensation, or SBC, expense) by over 11,000% to justify its current valuation. Additionally, I'd prefer to wait for a pullback, since NVDA is still near all-time highs and is a volatile stock that offers buying opportunities from time to time. As a result, I rate NVDA stock as a Hold. Nvidia Q3 Results Overview For Fiscal Q3 2025, Nvidia's revenue came in at $35.08 billion, up 94% year-over-year and 17% quarter-over-quarter. This beat the $33.25 billion analyst consensus. Meanwhile, adjusted EPS came in at $0.81, beating the $0.74 estimate and growing by 103% YoY and 19% sequentially. The Data Center segment was particularly strong, reaching $30.8 billion, well above the $29.14 billion estimate, growing 112% YoY, while Gaming revenue hit $3.3 billion (up 15% YoY), beating the $3.06 billion estimate. Automotive revenue was also strong, growing 72% to $449 million, and Professional Visualization revenue grew 17% YoY to $486 million. Nvidia's adjusted gross margin was 75%, in line with expectations. Regarding gross margins, management said this in the Q3 earnings call: \"As Blackwell ramps, we expect gross margins to moderate to the low 70s. When fully ramped, we expect Blackwell margins to be in the mid-70s.\" So, there may be a slight margin headwind in the short term. Next, Nvidia produced $16.79 billion in free cash flow, a crazy 138.38% increase year-over-year. This brings TTM free cash flow to $56.421 billion. Looking ahead, Nvidia forecasted Q4 revenue of $37.5 billion, plus or minus 2%. This was a bit ahead of the $37.1 billion estimate but didn't meet some buy-side estimates that were as high as $41 billion. In the earnings call, CEO Jensen Huang stated, “Blackwell demand is staggering, and we are racing to scale supply to meet the incredible demand customers are placing on us.” A recent pre-earnings article on Nvidia stock titled “Nvidia Q3 Preview: This Is The Big Quarter” noted that Blackwell chips were overheating, which had the potential to affect Nvidia's revenues. However, based on the company's results and Huang's commentary, it appears that demand is still strong. One thing investors probably don't like is that growth is decelerating, but it's obvious that a deceleration would occur. Did you really think NVDA could maintain triple-digit revenue growth rates? Revenue growth was ~265% in Fiscal Q4 2024, 262.1% in Q1, and 122.4% in Q2. Now, revenue growth came in at 94%. In case you didn't know, 94% is still high, and so is a 17% sequential increase. Hyperscaler Demand Remained Strong A bearish argument going into the earnings report was whether hyperscalers would continue spending heavily on AI infrastructure, especially due to overheating GPUs and the already-significant CapEx related to other older Nvidia GPUs. Again, though, the Q3 report told a different story. Nvidia said in the earnings call: “Cloud service providers were approximately half of our data center sales, with revenue increasing more than 2x year-on-year.” Nvidia highlighted adoption by major companies. Here are some quotes for each company: Oracle (ORCL): “Oracle announced the world's 1st Zettascale AI cloud computing clusters that can scale to over 131,000 Blackwell GPUs to help enterprises train and deploy some of the most demanding next generation AI models.” Microsoft (MSFT): “Yesterday, Microsoft announced they will be the 1st CSP to offer in private preview Blackwell based cloud instances powered by NVIDIA, GV200 and Quantum InfiniBand.” Amazon's (AMZN) AWS, CoreWeave, and Alphabet's (GOOGL) Google Cloud: “NVIDIA H200 powered cloud instances are now available from AWS, CoreWeave and Microsoft Azure with Google Cloud and OCI coming soon.” This level of demand highlights Nvidia’s critical role in AI infrastructure, and Nvidia keeps surprising to the upside. Lots Of Growth Is Being Priced In Nvidia closed at $144.13 in after-hours trading, so let's see how much growth is priced into the stock. I'll use an H-model calculator that I've created to set particular growth rates that Nvidia will need to achieve for its stock to be fairly valued. In the trailing 12 months, Nvidia's FCF comes in at $56.421 billion, but if you subtract stock-based compensation from that (because shareholder dilution shouldn't be ignored), then that number falls a bit to $52.011 billion. If you divide that by its undiluted share count of 24.49 billion, that gives you a FCF/share figure of $2.124. I'll use this number later for the valuation. Next, I calculated the discount rate (cost of equity) of 11.01%, which I got by using the CAPM model and inputting a levered beta of 1.32, per simplywall.st. I also used a terminal growth rate of 3% (the high range of my usual terminal growth rates, between 2-3%). This is about 1% higher than long-term GDP and inflation expectations in the US due to Nvidia's pricing power and importance. How The H-model Works My H-model takes an initial high growth rate of FCF/share (the growth rate seen in year 1), and that growth rate then decelerates linearly until reaching the terminal growth rate. I set the initial high growth rate to 40% because, presently, analysts expect 39.5% FCF growth from Fiscal 2025 to 2026, and I rounded up to 40% to factor in a benefit from any potential buybacks. With a starting growth rate of 40%, I would need to set the length of the high growth period to 24 years (the number of years it takes for the growth rate to reach 3%) in order for the stock's fair value to be approximately today's price (23.814 years to get the exact share price, but I'm rounding to 24 to make it simple). In short, this means that after year 1, the growth rate will fall by 1.54% per year until reaching the terminal growth rate of 3% in year 25. To make it easier to visualize, that still implies a 32.29% growth rate in year 5, 24.58% in year 10, 16.88% in year 15, and 9.17% in year 20. If my math is correct, this growth trajectory would give you FCF/share of ~$29.14 by year 10 and ~$241.51 by year 25. That's an ~11,271% increase in 25 years to get a fair value of around $145, just $1 higher than the last price. See below. Maybe Nvidia can pull that off, but I'm not willing to bet on all that growth.   Nvidia Stock H-model Valuation (Author) Perhaps It's Better To Wait For A Dip While I'm not denying the short-term upside potential that Nvidia may have, as it recently broke out of a consolidation pattern, I think long-term investors may want to consider waiting for a dip, especially since its valuation is so high. Nvidia is a volatile stock that offers dip-buying opportunities from time to time. In the chart below, I highlighted 3 different occasions where NVDA stock fell by 20%+ or 30%+ just since the beginning of the year. Sure, it can keep rising, and you could “miss out,” but you shouldn't be investing in something because you're afraid to miss out. Unless you're a momentum investor, which is fine, you should buy if you actually think there's value. Patience is key. Perhaps another dip could be on the way. There's no need to take any notable-sized position near an all-time high after such large gains this year. NVDA Stock Chart (TradingView) The Takeaway Nvidia's Fiscal Q3-2025 earnings results showed again why the company is so hyped up. With revenue up 94% year-over-year to $35.08 billion, easily beating expectations, Nvidia continues to show its strength, even though revenue growth is decelerating. Hyperscaler demand is still strong, with CSPs making up half of Data Center revenue, which grew more than 2x YoY. Concerns raised about overheating Blackwell GPUs proved to be too pessimistic, as Nvidia is seeing staggering demand from major partners like Oracle, Microsoft, and AWS. Still, the stock's current valuation remains a problem. My H-model valuation shows just how much growth is being priced in, essentially saying that FCF/share needs to grow by over 11,000% in the next 25 years to justify its valuation. That's a lot of growth to expect. Currently, Nvidia Corporation stock may not offer the best risk-reward setup for long-term investors due to its valuation. Furthermore, the stock is still near all-time highs and has a volatile history, so it might be better to wait for a dip. Nvidia is one of the best companies in the world, but patience is important, too. I rate the stock as a Hold for now.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"analysis","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2485415302"}